10 Countries where China is investing big

Chinese companies have been increasingly using subsidiaries in the British Virgin Islands to make offshore investments while retaining a zero tax status.

For a country with a population of about 30,000 people, the British Virgin Islands are home to some 457,000 companies. Some notable Chinese firms that have subsidiaries in the territory include telecom giant China Mobile, social network SINA and automaker Geely, according to Reuters.

In the past, the income and gains of British Virgin Island companies were not subject to taxes by Chinese authorities because their transactions were confidential. China's FDI in the British Virgin Islands jumped a whopping $4.5 billion from 2009 to $6.12 billion in 2010. The territory also received about 22 percent of the $7.3 billion in Chinese FDI for Latin America in 2009.

In December 2009, the two countries signed a tax information exchange agreement in which Chinese officials could obtain information from the British Virgin Islands on the ownership of companies, allowing them to tax transactions and earnings.